Top Menu

Wednesday, May 25, 2016

Today's Headlines

Greece Wins Pledge for Debt Relief as IMF Bows to Euro Plan. (video) Greece’s creditors reached a preliminary accord to ease the country’s
debt burden but left the important details to be hammered out after
Germany’s federal election next year. At a meeting of euro-area finance ministers in Brussels that ended early
Wednesday, and paved the way for a 10.3 billion-euro ($11.5 billion)
aid payout, the International Monetary Fund retreated from its hard-line
stance for concrete and generous measures on Greece’s debt, allowing
creditors to announce a “breakthrough” despite giving no figures or real
commitments.

Macau Economy Seen at Risk as Moody’s Downgrades Gambling Hub. Moody’s Investors Service downgraded the Macau government’s credit
rating, reflecting concerns the Chinese city that’s home to units of Las
Vegas Sands Corp. and Wynn Resorts Ltd. will suffer volatile growth
amid slumping gaming revenue. The world’s largest casino hub was
cut by one grade to Aa3 and assigned a negative outlook, the rating
agency said in a statement Wednesday. Moody’s also lowered Macau’s
long-term foreign currency bond ceiling to Aa2 from Aaa and its
long-term foreign currency deposit ceiling to Aa3 from Aa2.

Traders’ Hopes Dim as Brazil Dream Team Faces Fiscal Nightmare.Brazil
bond investors are dialing back their optimism after newly
appointed Finance Minister Henrique Meirelles acknowledged that the
country’s fiscal problems are much worse than anyone had imagined.
Yields on government notes due in 2025 have jumped 0.55 percentage point
from an almost 12-month low on May 12, when the minister took office. Since
then, Meirelles -- part of a group of cabinet officials that Goldman
Sachs Group Inc. dubbed a “dream team” -- has said the economy is in
worse shape than he anticipated. Brazil will also face a budget deficit
excluding interest payments that’s 75 percent greater than the one
forecast by the previous government.

Burned Indian Bankers Turn Scrooges After Bad Loans Swell Losses. It’s
back to square one. Loan growth at Indian banks is slowing again,
proving that a rebound seen in February was just a blip. Credit
grew 9.16 percent in the 12 months through April 29, the least since
October, and compared with an average of about 14 percent over the last
five years, fortnightly central bank data compiled by Bloomberg show.
Growth reached as high as 11.6 percent in the period through Feb. 19. A
lending revival has eluded Prime Minister Narendra Modi, hindering
efforts to spur investment as he completes two years in office this
week. Twelve Indian state-run banks reported combined losses of 206
billion rupees ($3.1 billion) for the March quarter, hurt by surging bad
debts. That’s made banks unwilling to part with funds, just as falling
short-term commercial paper rates drive borrowers to the money markets,
according to Sundaram Asset Management Co.

European Stocks Cap Best 2-Day Gain in 3 Months on U.S. Optimism. European equities posted their biggest back-to-back advance since
February as optimism grew the U.S. economy is strong enough to withstand
higher interest rates. The Stoxx Europe 600 Index added 1.3
percent at the close of trading. Banks posted the biggest gains among
industry groups, followed by energy shares and miners as commodities
rose. Europe’s benchmark jumped yesterday after better-than-forecast
U.S. housing data signaled economic strength before a potential Federal
Reserve rate hike next month.

Pre-OPEC Meeting Said to Have No Discussion of Oil-Output Limits. (video) The final preparatory gathering of officials from the Organization of
Petroleum Exporting Countries before the ministerial meeting on June 2
didn’t discuss any limits on crude output, the latest signal that the
group will stick to its current strategy of letting low prices eradicate
a supply glut. Discussions at the Economic Commission Board in
Vienna, at which representatives of OPEC members review the market,
focused on technical matters, said two people familiar with the matter,
who asked not to be identified because the talks were private.

Shell Cuts 2,200 More Jobs to Withstand Lower-for-Longer Oil. (video) Royal
Dutch Shell Plc will cut 2,200 more jobs, taking the tally of
losses to 12,500 from 2015 to 2016 as Europe’s biggest oil producer
continues to adjust to the slump in prices. At least 5,000 jobs will be
cut this year, the company said in an e-mailed statement. These
reductions are in response to oil prices staying “lower for longer,” and
a result of the acquisition of BG Group Plc earlier this year, said
Paul Goodfellow, Shell’s vice president for the U.K. and Ireland. Shell
and BG employed about 94,600 people at the end of 2015. “These are
tough times for our industry,” Goodfellow said
in the statement. “We have to take further difficult decisions to
ensure Shell remains competitive through the current prolonged
downturn.”

Tiffany(TIF) Sales Trail Estimates on Weaker Demand From Tourists. (video) Tiffany & Co., the luxury jewelry retailer, posted first-quarter
sales that missed analysts’ estimates, hurt by weak demand from tourists
and domestic U.S. consumers. Revenue fell 7.4 percent to $891.3
million in the quarter through April 30, the New York-based company said
Wednesday in a statement. Analysts had estimated $915 million, on
average. Profit, which fell for a sixth straight quarter, was 69 cents a
share, or 64 cents, excluding a tax benefit. Analysts projected 68
cents. The shares slipped as much as 3.1 percent to $61.89 in New York. Tiffany already had slid 16 percent this year through Tuesday.

Alibaba(BABA) Undergoing SEC Investigation Over Accounting Practices. Alibaba Group Holding Ltd. said it’s being investigated by the U.S.
Securities and Exchange Commission over its accounting practices and
whether they violate federal laws. The company is providing
documents and cooperating with the probe, according to the Hangzhou,
China-based company’s annual report. The investigation is looking at
consolidation practices, related party transactions and data reported
from its Singles’ Day promotion.

The positions and strategies discussed on BETWEEN THE HEDGES are offered for entertainment purposes only and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor of this blog holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in anyway, considered liable for the investment performance of any securities or strategies discussed.